The Wal-Mart Weekly: Store brands badly need re-invention

Wal-Mart's store brands are aging rapidly

This week, the power went out in much of Oklahoma, Kansas and Missouri, including a few Wal-Mart stores I visited. While performing some research after the lights came back on, it struck me why a competitor like Target is considered more upscale in terms of offered merchandise. Wal-Mart is known as the discount-seeking customer's best friend, and in many cases those discounts are obtained using store brands. However, Wal-Mart's store brands are anything but exciting.

In the retailer's grocer section alone, store brands like Sam's Choice and Great Value were being merchandised in a way that wouldn't excite a rat on crack. In fact, why is Wal-Mart calling anything Sam's Choice 16 years after his death (in reference to Wal-Mart founder Sam Walton)? Anyway, the design of these packages and the way they sit on the shelf next to the larger, well-known national brands was surprising.

Very little defined and differentiated these products from any other discount brand like Always Save and Best Choice (which many retailers use as store brands). Now, maybe this is Wal-Mart's intention, but the packaging of these items -- from cookies to peanut butter to paper towels to ketchup -- was incredibly boring. The prices on these store brands were great -- but the look and feel of them screamed dollar store, if you get my meaning.

Wal-Mart's store brands are stale even outside the grocery category

Venturing outside the grocery area, Wal-Mart store brands like Mainstays, Faded Glory, George and White Stag were no better. Mainstays is a store brand for home merchandise like hangers, bedsheets and curtains. What made me look at them? Looking for the absolute lowest price in the category, that's what. The marketing of these brands was virtually non-existent. Faded Glory and George are a few of Wal-Mart's apparel private label brands. The brands included denim jeans, sweaters, and shirts (among other items).

Again, very little differentiation here besides having the lowest price. And White Stag, Wal-Mart's private-label jewelry brand? The products looked they fell off a flea market truck in China. These items had to have the worst (read: cheapest) appearance of anything I saw in any category. iLo, another Wal-Mart store brand in electronics, had zero marketing differentiation as well, and in many cases was more expensive than the big brands those products were displayed next to. What on earth? Is Wal-Mart even paying attention to some of these things?

What needs fixing if Wal-Mart is ever going to appeal to brand-conscious shoppers

Although specific brands made for specific retailers are generally placed on shelves to get customers comparing them to large brands such as Levi's, Frito-Lay and Casio, they still need to be marketed well if customers are going to latch onto them and make repeat purchases. After all, almost all private-label products from the pharmacy store industry to the discount retail industry are made by the larger companies anyway. Manufacturers like Procter & Gamble, Frito-Lay and Quaker Oats make many store brands for most national retail names you'd recognize, with slightly altered formulas and small changes to differentiate them from the actual known brand names.

But, it's up to the retailer to market the product wisely. Case in point: Target Corporation (NYSE: TGT)'s Archer Farms brand. This grocery brand inside many Target stores has a uniquely identifiable look and feel that sets is apart from almost any other store brand I can think of. The paper and plastic packaging is different than the big brands, right down the the color coding used in grocery categories to the matte feel of the packages themselves (instead of the usually glossy feel).

Target nailed what a differentiated store brand should be with its Archer Farms brand and ensures it is different beyond its looks by offering flavors, sizes and combinations the big brands don't even offer. Take a look at some of the flavors of Archer Farms potato chips the next time you are in Target -- do the big brands offer those combinations? Nope.

This is what Wal-Mart needs: a complete refresh of at least the private-label store brands in its grocery section to bring those brands up to the level even bargain-basement customers expect at the end of 2007. The retailer's store brands are oddly marketed, seem disconnected from the competitive big brands (not necessarily a minus) and have an outdated merchandising look and feel. Wal-Mart could really shine in many of the categories in groceries, general merchandise, health and beauty aids, and more by giving some "oomph" to its aging store brands as quickly as possible. The competition is not waiting and is leapfrogging Wal-Mart by a mile here.

The examples above are only a few from Wal-Mart's collection of store brands. I would posit to the retailer's manager(s) of store brands to take some lessons from Target (and just about any other retailer) to see how to energize those store brands and make them stand out from the big brand names. Those big brands won't be offended by you marketing your own brands with moxie right next to the normal brand names consumers are used to.

Have a great weekend and I'll see you right here this time next week for another edition of The Wal-Mart Weekly.